Unions unhappy with super guarantee trade-off

Federal government support for an increase to the superannuation guarantee from 9 per cent to 12 per cent as a way of reducing wage-inflation pressure has been backed by the superannuation sector but opposed by unions.

The Minister for Superannuation and Assistant Treasurer,
Bill Shorten
, recently raised the prospect of a trade-off between salary and super increases as a way of lowering inflation and boosting retirement savings.

“One of the interesting levers that can help diffuse inflation is superannuation," Mr Shorten said at the time. “What government has put in place to encourage superannuation moving from 9 to 12 per cent will have a dampening effect on real wage growth."

A trade-off policy was successfully undertaken in the 1980s under the Hawke-Keating Labor government.

Peter Dixon, a professor of economics at Monash University’s Centre of Policy Studies, said the strategy depended on whether employees accepted increased super as an alternative to a wage increase.

“It will work if workers reduce their demands for take-home pay," Professor Dixon said. He said that 30 years ago, a more centralised wage system helped ­federal governments exert more influence.

The median expected inflation rate was a “surprisingly high" jump from 3.1 per cent to 3.8 per cent in September, according to the Melbourne Institute of Applied Economic and Social Research.

The Australian Institute of Superannuation Trustees has welcomed Mr Shorten’s comments and backed his claims that an increase in the super guarantee would help reduce wages and inflation.

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“In the main, previous increases in the compulsory super rate were paid for by workers out of productivity gains in the form of forgone wage rises," AIST chief executive
Fiona Reynolds
said.

“So despite what many employees claim about the superannuation guarantee being a ‘tax’ on business, we would expect the gradual lift by 2019 to produce some downward pressure on wages and inflation."

Ms Reynolds said that as an anti-inflationary measure, some industries could consider shortening the period over which they introduce the increases.

Australian Council of Trade Unions secretary
Jeff Lawrence
backed the government’s decision to increase the super guarantee but said workers would “not accept a trade-off that results in reductions in real wages to fund employer super contributions".

Mr Lawrence said: “Unions have a strong track record of delivering better retirement savings without wage trade-offs, and reject the notion that superannuation should be used as a tool to prevent workers receiving their fair share of national income."